According to the group, the agreement is “in the best interest of our community and our shareholders”.
(Photo: AP)
Dusseldorf The Facebook parent company Meta has settled a class action lawsuit in the company’s biggest data protection scandal to date with a substantial payment. According to court documents from Friday night, the social network agreed to a $725 million settlement payment. The background is a misuse of user data by the British analysis company Cambridge Analytica that became known in 2018.
The plaintiffs’ attorneys speak of the “largest compensation payment ever in the context of a data protection lawsuit” and the highest sum that Facebook has ever paid. Meta itself does not admit any liability with the payment, but gets rid of a high balance sheet risk. Fines in the US have the potential to far exceed forecasts, depending on the court. Payments in the billions keep coming.
The agreement was therefore made “in the best interests of our community and our shareholders.” The price of the Meta share, which was 2.2 percent down on Wall Street at the end of the day, clearly turned positive in over-the-counter trading on Friday.
Proceedings against Facebook founder Mark Zuckerberg
The agreement had become apparent, the Facebook representatives had applied for a suspension of the proceedings at the end of August in order to be able to negotiate a settlement. However, the legal dispute that is now ending does not finally end the chapter for Meta.
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In May, US authorities filed a lawsuit against Facebook founder and Meta boss Mark Zuckerberg. “Zuckerberg personally played a role in Facebook’s failure to protect user privacy and data,” said Attorney General Karl Racine, “which led directly to the Cambridge Analytica incident.” The announcement alone wiped out $35 billion in market value at Meta.
The background is that Facebook gave the British political consulting company Cambridge Analytica access to data from up to 87 million users. However, they knew nothing about it. The perfidious thing: the privacy settings of the time also gave access to data from friends networked on Facebook.
>> Read also: Facebook in transition – Meet Zuckerberg’s new executive team
Zuckerberg had to appear in 2018 for an hour-long hearing in the US Congress. At that time, the CEO justified the allegations largely with his own omissions.
The British data analysis company Cambridge Analytica, founded in 2013, has since been dissolved: revelations about the covert influence on the 2016 US presidential election led to the demise of the consulting firm. The company, which is close to conservative politicians, had offered its services in numerous countries.
Meta under pressure
Cambridge Analytica evaluated millions of user profiles with the help of an app. This enabled eventual winner Donald Trump’s presidential campaign to run very accurate ads. The influence went so far that, depending on their political attitude, voters should be encouraged to go to the polls – or discouraged from doing so. False statements were also used for this purpose.
The accusation was that Facebook made this approach possible by opening up its interface to third-party providers in the hope of higher income. After the scandal became known, Facebook restricted the amount of information that external app developers can see.
Meta is currently under economic pressure. In the third quarter, sales fell four percent to $27.71 billion, the second consecutive decline. Profits even collapsed by about half to $4.4 billion. That was the worst result since 2019 and the fourth straight decline. The share price has lost a good 63 percent over the year.
More: Inside Meta – The Deep Fall of the Facebook Group